Tesla is urging the Biden administration to hike civil penalties for car manufacturers that fail to meet fuel economy requirements.
The National Highway Traffic Safety Administration (NHTSA) issued a notice on August 18 that it could impose higher penalties for prior model years to car manufacturers that couldn’t meet fuel efficiency requirements. Before it does so, it will consider public comments.
Car manufacturers say that higher penalties could cost them at least $1 billion annually, due in part to the higher prices they will have to pay for credits.
Reuters notes that the Trump administration delayed a 2016 regulation that would have more than doubled penalties for those not complying with the Corporate Average Fuel Economy (CAFE) requirements.
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Speaking with government officials, Tesla said that delaying the higher penalties “produces continuing uncertainty in investments and transactions across the industry, and any delays will continue to have deleterious effects on the credit market until the issue is resolved.”
Tesla also wrote a letter to the Second Circuit U.S. Court of Appeals to reinstate the higher penalties, stating that “the uncertainty perpetuated by NHTSA’s sluggish rulemaking pace is thus compounded by the likelihood of yet another round of litigation.”
Of course, a significant portion of Tesla’s business is selling credits to manufacturers in order to meet emission regulations. Indeed, the company has sold $2.69 billion worth of EV credits since 2019 so it’s not exactly surprising that it wants regulators to tighten restrictions as it could help it sell credits at a higher price.
In a court filing, a group representing the likes of General Motors, Toyota, Ford, and Volkswagen, asked the court to reject Tesla’s request.
“That Tesla might benefit from more certainty about the worth of the CAFE credits that it has amassed is hardly a reason to cut off an ongoing administrative process,” it wrote.
